Question
Case: In 2017, Luke Whitney founded Lukes Delivery Service and he come to your group for advice. He need to know how much net income
Case:
In 2017, Luke Whitney founded Lukes Delivery Service and he come to your group for advice. He need to know how much net income the business earned during the first month of operation but he has no one currently to assist in providing him with the required information. The company completed the following transactions during its first month of operations for January 2017:
A. Lukes Delivery Service began operations by receiving $6,000 cash and a truck valued at $11,000. The business gave Luke capital to acquire these assets.
B. Paid $300 cash for supplies.
C. Prepaid insurance, $700.
D. Performed delivery services for a customer and received $800 cash.
E. Completed a large delivery job, billed the customer $1,500, and received a promise to collect the $1,500 within one week.
F. Paid employee salary, $700.
G. Received $12,000 cash for performing delivery services.
H. Collected $600 in advance for delivery service to be performed later.
I. Collected $1,500 cash from a customer on account.
J. Purchased fuel for the truck, paying $800 with a company credit card. (Credit Accounts payable)
K. Performed delivery services on account, $900.
L. Paid office rent, $600. This rent is not paid in advance.
M. Paid $200 on account.
N. Owner withdrew cash of $2,100.
Requirements:
1. Record each transaction in the journal and key each transaction by its letter.
Explanations are not required.
2. Post the transactions that you recorded in their respective T-accounts.
Cash Service revenue
Accounts receivable Salary expense
Supplies Depreciation expense
Prepaid Insurance Insurance expense
Delivery truck Fuel expense
Accumulated depreciation Rent expense
Accounts payable Supplies expense
Salary payable Income summary
Unearned service revenue
Lukes, Capital
Lukes, Drawing
3. Prepare the following:
Unadjusted Trial balance for the month ended January 31, 2017 based on the information already provided.
It is now a few days after January 31, and you are provided with the following additional information relating to that month:
O. Accrued salary expense, $700.
P. Depreciation expense, $60.
Q. Prepaid insurance expired, $250.
R. Supplies on hand, $200.
S. Unearned service revenue earned during January, $500.
4. Using the additional information provided above, complete the following:
adjusting journal entries for transactions O to S. (Key each transaction by its letter. Explanations are not required).
Post the transactions to their respective T-accounts.
5. Prepare the Adjusted trial balance, Lukes Delivery Services Income Statement, Statement of Owners equity for the month ended January 31, 2017, and the Classified Balance sheet on that date.
6. Journalize and post the closing entries to their respective T-accounts.
7. Prepare a post-closing trial balance as at January 31, 2017.
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